CUET Economics Chapter-Money

  • Board
    CBSE
  • Textbook
    NCERT
  • Class
    Class 12
  • Subject
    Economics
  • Chapter
    CUET Economics Chapter-Money
  • Chapter Name
    Money
  • Category
    CUET (Common University Entrance Test) UG

Important MCQ Questions on CUET Economics Chapter-Money with Detailed explanation

HT having an expert teacher of Economics prepared Important MCQ Questions on CUET Economics Chapter-Money with Detailed explanations. All the Chapters in the syllabus of CUET Economics are covered with coverage of the entire syllabus. This page is prepared for Chapter Money and covers all important topics of the competitive exam CUET for domain subject test. Check out the chapter-wise CUET Economics MCQ questions. 

MCQ Questions for CUET Economics Chapter-Money Set-1

Macroeconomic Economics - MCQ on Money and Banking

Class XII

Q.1 An economy where goods are exchanged for good is known as

a) S-S economy.

b) E–E economy.

c) C-C economy.

d) G-G economy.

Answer:

c

Explanation: Before the invention of money, goods were exchanged for goods, this system was called barter system, and such an economy was called a C-C economy.

Q.2 Barter system was prevalent in the world before the invention of

a) goods.

b) services.

c) coins.

d) money.

Answer:

d

Explanation: When money was not invented, people used to satisfy their wants by exchanging goods with each other under what was known as the barter system.

Q.3 Money was originated in the need to facilitate

a) exchange.

b) services.

c) goods.

d) commodities.

Answer:

a

Explanation: Money finds its origin in the need to facilitate exchange. Therefore, money is generally defined as a thing, that is commonly accepted as a medium of exchange.

Q.4 Double coincidence of wants implies that goods in possessions of two different individuals are

a) not needed by each other.

b) needed by each other.

c) acceptable by only one.

d) completely not acceptable.

Answer:

b

Explanation: Double coincidence of wants is a pre condition for the barter system of exchange. It implies that goods possessed by two different individuals, are needed by each other.

Q.5 Payments that would certainly be very difficult under barter system of exchange are

a) on the spot payment.

b) daily payments.

c) future or contractual payment.

d) transfer payments.

Answer:

c

Explanation: Contractual or future payments are certainly not payable in case of barter system, as in this system two individuals would enter in to a contract of exchanging things on the spot, so it’s a system of spot payment or rather spot exchange.

Q.6 Introduction of money has separated the acts of

a) exchange.

b) sale and purchase.

c) goods for goods.

d) contract.

Answer:

b

Explanation Under the barter system to buy a thing, an individual must at the same time sell something of equal value. With the introduction of money, an individual can buy a thing with money without selling anything at the same time.

Q.7 In the absence of money wealth was stored in the form of

a) services.

b) goods.

c) metal.

d) land.

Answer:

b

Explanation: Wealth was stored in terms of goods, in the absence of money. But it involved some problems like high cost of storage and loss of values.

Q.8 Money can be defined as anything, that serves as a medium of

a) exchange.

b) want satisfaction.

c) Fulfillment.

d) transfer of value.

Answer:

a

Explanation: Money was introduced as an instrument of exchange. It serves as a medium of exchange and helps the people to buy things, they desire without exchanging any goods for it.

Q.9 Fiat money refers to

a) transferable money.

b) money by order.

c) mobile money.

d) coin money.

Answer:

b

Explanation: Fiat money refers to money by order or authority of the Government. The Government makes the acceptance of it compulsory in case of any knd of sale or purchase.

Q.10 Credit money refers to money in which value is

a) more than commodity value.

b) equal to commodity value.

c) less than commodity value.

d) far more than commodity value.

Answer:

a

Explanation: Credit money refers to money in which value is more then commodity value. For example; commodity value of paper with which a 100-rupee note is made of is far less than the money value of Rs 100 note.

Q.11 Measure of value or unit of value is the

a) secondary function of money.

b) primary function of money.

c) contingent function.

d) important function of money.

Answer:

b

Explanation: Measure of value or unit of value is the primary function of money. It means that the value of each and every goods is measured in the monetary unit.

Q.12 Store of value is a

a) secondary function of money.

b) primary function of money.

c) contingent function.

d) Iimportant function of money.

Answer:

a

Explanation: Store of value means store of wealth. Storing of wealth became easy with the introduction of money. Store of value/wealth is the secondary function of money.

Q.13 In order to purchase goods from far off places one needs

a) contacts.

b) goods for exchange.

c) transport facility.

d) purchasing power.

Answer:

d

Explanation: Money serves as a convenient mode of transfer of value. In order to purchase goods from far off places, one needs purchasing power at those places. Money has made it possible, as it can be easily transferred from one place to another.

Q.14 Money is a dynamic factor as

a) it facilitates exchange beyond limits.

b) its value keep changing.

c) it stimulates the system.

d) it regulates the economy.

Answer:

a

Explanation: Money imparts stability to the economy and pushes an economy to a higher level. It is a dynamic factor, as it facilitates exchange beyond limits, helps in accumulation of wealth and also facilitates flow of capital from one place to another place.

Q.15 Supply of money is stock of money, held by the people of a country at a

a) period of time.

b) point of time.

c) particular area.

d) particular region.

Answer:

b

Explanation: Supply of money is a stock concept. It is the total stock of money, held by the people at a particular point of time. It includes stock, held by the banking system of the country.

Q.16 Producers of money are the

a) businessmen of the country.

b) traders of the country.

c) Government and banking system of the country.

d) service class people of the country.

Answer:

c

Explanation: Producers of money refer to suppliers of money. The Government of the country and the banking system of the country including central bank and the commercial bank, are the producers of money.

Q.17 Supply of money includes the stock of money, held by the people other than the

a) suppliers of money themselves.

b) businessmen themselves.

c) government themselves.

d) bankers themselves.

Answer:

a

Explanation: Supply of money includes the stock of money ,held by the people other than the suppliers of money themselves. It refers to the stock of money, held by the public or those who demand money.

Q.18 Inter-banking claims are not a part of

a) cash reserve ratio.

b) demand deposits of people.

c) statutory liquidity ratio.

d) bank deposits.

Answer:

b

Explanation: Gross demand deposits include inter-banking claims but Net demand deposits do not include inter–banking. Hence, only net demand deposits are taken as part of money supply.

Q.19 When money supply is measured using M3 measure, what we get is

a) aggregate monetary resources of the country.

b) total money supply of the country.

c) complete money supply of the country.

d) whole money supply of the country.

Answer:

a

Explanation – M3 is a broader concept compared to M1. It is summation of the currency, demand deposits, demand deposits with RBI, time deposits of the people with the commercial banks. When money supply is measured using M3 measure, what we get is aggregate monetary resources of the country.

Q.20 Under minimum reserve system RBI has to maintain a reserve of Rs.200 crores in the form of

a) demand deposits.

b) fixed deposits.

c) gold and foreign securities.

d) cash deposits.

Answer:

c

Explanation: RBI is the central bank and main supplier of currency in India. It issues currency on the basis of minimum reserve system.Under minimum reserve system, RBI has to maintain a reserve of Rs.200 crores in the form of gold and foreign securities.

Q.21 RBI has to maintain a reserve of Rs.200 crores in the form of gold and foreign securities of which gold must be of

a) Rs. 180 crores.

b) Rs. 160 crores.

c) Rs .130 crores.

d) Rs. 115 crores.

Answer:

d

Explanation: RBI issues currency on the basis of minimum reserve system. Under minimum reserve system, RBI has to maintain a reserve of Rs.200 crores in the form of gold and foreign securities, of which gold must be of 115 crores.

Q.22 The entire currency issued, has the backing of

a) cash reserves.

b) minimum gold reserves.

c) fixed deposits.

d) foreign exchange.

Answer:

b

Explanation: Note issuing in India, is governed by minimum reserve system. The entire currency issued, has the backing of minimum gold reserves, which must be atleast Rs. 115 crores.

Q.23 The primary function of a commercial bank is, accepting deposits from public and

a) granting loan.

b) underwriting.

c) purchase and sale of securities.

d) purchase and sale of foreign exchange.

Answer:

a

Explanation: Commercial bank performs two primary functions, accepting deposits from the public and advancing loan for the productive purposes on approved security.

Q.24 Remitting of money ,at distant places through bank drafts by banks, is

a) primary function of bank.

b) agency function of bank.

c) secondary function of bank.

d) contingent function of bank.

Answer:

b

Explanation: Bank has made possible the transfer of money, from one place to another without carrying cash. Remitting of money at distant places through bank drafts by banks, is an important agency function of bank.

Q.25 In order to keep one’s valuable like gold, diamond, silver etc. in safe custody, the bank provides the facility of

a) transportation of goods.

b) lockers.

c) custody of goods.

d) safe.

Answer:

b

Explanation: Bank provides locker facility to their customers. People can keep their valuables or important documents in these lockers. The charges for this facility are very nominal.

MCQ Questions for CUET Economics Chapter-Money Set-2

Q.26 Banks give advice to their customers on financial matters on the basis of business information and

a) data collected by them.

b) statistical data collected by them.

c) economic data.

d) scientific data.

Answer:

b

Explanation: Banks are familiar with the economic condition of the country, they give advice to their customers, on the basis of business information and statistical data collected by them.

Q.27 Deposits with commercial banks, reflected as demand deposits of the banks, are called

a) primary deposits.

b) secondary deposits.

c) fixed deposits.

d) cash deposits.

Answer:

a

Explanation: Deposits made by people with commercial banks, reflected as demand deposits of the banks, are called primary deposits. They are reflected as a part of demand deposits of the banks.

Q.28 Loans are never offered in cash, they are always reflected as

a) demand deposits in the favour of borrowers.

b) cash reserves.

c) loan.

d) derivative deposits.

Answer:

a

Explanation: When loans are offered, demand deposits of the banks are raised. They are reflected as demand deposits in favour of the borrowers, and are not offered in cash.

Q.29 The bank that controls the supply of credit in the economy, is

a) commercial bank.

b) agricultural bank.

c) central bank.

d) industrial bank.

Answer:

c

Explanation: central bank is the apex bank of the economy. It controls the supply of credit in the economy, and can increase or decrease money supply in the country.

Q.30 Central bank collects statistical information, relating to

a) banking, currency and foreign exchange.

b) development

c) economic growth

d) inflation and deflation

Answer:

a

Explanation: Information, collected by central bank, relating to banking, currency and foreign exchange, helps in making policies and plans of growth and development.